Project Summaries

05-686  Project Manager: J. M. Reeves

EMERGING COTTON ISSUES IN WORLD POLICY

Darren Hudson, Texas Tech University

The overall objective of this research project is to evaluate emerging issues in cotton. In the past this has focused on Brazil, China, and India production issues. This project has also focused on cap and trade when that was an issue. As is always the case, a number of issues arise during the year in global policy that requires attention both for short-run decision making and longer-term thinking. This year was focused on examining the impacts of potential global warming/climate change on global cotton markets. In particular, the impacts of various global average temperature rises were simulated and the estimated impacts on production, consumption, trade, and prices were analyzed.

This study finds that modest changes in temperature (around +1 degree Celsius) results in only modest changes in global production and price (+6% in price and -1.3% in production).  However, more extreme rises in temperature (+5 degrees Celsius) would result in more extreme price changes (between +17% and +135% depending on the regions of the world most impacted).

All simulations such as this are subject to high degrees of forecasting error, but their key lessons are the real value of the exercise. Here, the focus should be on the relevance of potential ideas to mitigate the overall impacts. First, our simulation "holds technology constant." That is, we do not allow for changes in technology to mitigate the effects of climate change. Thus, this analysis shows us that because the potential impacts can be quite large depending on severity of climate change, focusing technological development on things like drought and heat tolerance could pay major dividends in the future. Second, under modest temperature rises, places like the U.S. stand to benefit from higher overall prices.

Overall, then, this study concludes that the potential impacts of climate change are large enough to warrant continued focus on drought resistance technologies and varieties, but that only under scenarios of fairly dramatic temperature change do drastic effects on the cotton market emerge.

 

Project Year: 2012
 

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